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China’s OBOR could transform global trade

 May 1, 2018 

The ambitious One Belt One Road (OBOR) is regarded as the most important driver for China’s long-term development strategy and foreign policy initiative.

Intended to shape China’s national economic development strategy and international activities, it is also being seen as a way to offset part of China’s existing domestic overcapacity by exporting its engineering capabilities, materials and equipment. 

China hopes to spur further demand for its goods and services by enhancing connectivity and trade between regions. Within China, around 16 of the country’s 27 provinces are covered by OBOR and an even larger number has indicated a desire to participate.  For many less developed regions of China, mostly in inland China, the OBOR is a major opportunity to catch up with the more advanced provinces on China’s East Coast.  

The OBOR is also China’s grand strategy for developing a larger leadership role on the international stage and enhancing ties with neighbouring nations.

China, which is also home to more than 50 per cent of the world’s total constructed high speed railway, has pitched its high speed railway to Thailand, India, Indonesia and Malaysia. 

Not only that, a growing number of Chinese students are choosing to study in countries and regions involved in the OBOR Initiative, according to the official data. Over 66,100 Chinese students studied in the OBOR countries in 2017, up 15.7 per cent from 2016. International students from the OBOR countries increased 11 per cent in 2017 to 317,200, about 65 per cent of the overall total, as per the Ministry of Education, China

China’s value of imports and exports to OBOR countries also reached $1.14 trillion in 2017, up 17.8 per cent on a year-on-year basis. China’s value of imports and exports to OBOR countries accounted for 26.5 per cent of the country’s total value of imports and exports in 2017. The figures are as per China’s State Council Information Office.

India’s Opposition To OBOR

India is the only South-Asian country not involved in China’s OBOR project. It is suspicious that China's development agenda masks a bid for strategic assets and geopolitical ambitions. CPEC, a flagship project of the OBOR, runs through Pak-Administered Kashmir and Gilgit-Baltistan; both regions are considered by India to be Indian territories. 

India’s foreign ministry has gone on record to state that the “The so-called 'China-Pakistan Economic Corridor' violates India's sovereignty and territorial integrity. No country can accept a project that ignores its core concerns on sovereignty and territorial integrity”

Despite border dispute, India and China share a good working trade relation with each other. India exports cotton, copper, iron and spices to China, while importing telecom instruments, chemicals, fertilizers and consumer electronics from its northern neighbour. The total trade between the Asian economic giants was US$64.57 billion in 2017, slightly below the previous years’ figures of US$65.14 billion (2016) and US$70.71 billion (2015).  

However, India’s trade deficit with China is a major concern for India. In the year 2017, the trade deficit was US$46.69 billion, as per India’s commerce ministry. In 2016 and 2015 it was US$48.68 and US$52.69 billion dollars respectively.This trade deficit is attributed primarily to the fact that Chinese exports to India rely strongly on manufactured items.

Besides, India is concerned that China may use its economic power to increase its geopolitical leverage and, in doing so intensify security concerns for India. India sees the OBOR megaproject as lacking transparency. 

To counter China’s OBOR, India is pursuing its own road project to connect India’s northeast with Myanmar and Thailand. It is also developing multimodal linkages with Myanmar and Bangladesh. It has engaged with Iran on Chabahar Port and with Iran and other partners in Central Asia on International North South Transport Corridor. India in collaboration with Japan has also proposed Asia-Africa sea corridor

India is wary of how the project could massively increase Chinese influence and presence not just in Pakistan, but in other neighboring Asian countries.  However some analysts caution India on missing out on an ambitious initiative that aims to integrate Asia with Europe through a network of rail lines and new trade corridors.

 

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